57 Pages Posted: 20 Dec 2015 Last revised: 25 Jan 2017
Date Written: January 17, 2017
We study investments in impact funds, defined as venture capital or growth equity funds with dual objectives of generating financial returns and positive externalities. Being an impact fund elevates a fund’s marginal investment rate by 14.1% relative to a traditional VC fund, even more for funds focused on environmental, poverty, and minority/women issues. Europeans and UNPRI signatories have sharply higher demand for impact. Three investor attributes – household-backed capital, mission-oriented investors, and investors facing political/regulatory pressure to invest in impact – account for the higher impact demand. In contrast, legal restrictions against impact (e.g., ERISA) hinder 25% of total demand.
Keywords: Venture Capital, private equity, impact investment, socially responsible investment, UN principles of responsible investment, sustainable investing, corporate social responsibility.
JEL Classification: G1, G2
Suggested Citation: Suggested Citation
Barber, Brad M. and Morse, Adair and Yasuda, Ayako, Impact Investing (January 17, 2017). Available at SSRN: https://ssrn.com/abstract=2705556